AMP has had another pretty poor year under Stan Wallis and there were plenty calling for his head.

You would have to doubt it.

I rocked up to the AGM as a not-happy-Stan shareholder expecting there would be millions of others like me armed with a few grenades to throw at chairman Stan Wallis.

Thankfully, there were none of those tiresome “I’ve been associated with AMP since my dad started investing tuppenny a month from his measly coal miner’s wage into a life insurance policy for me” yarns and I would have to say the questioning was amongst the best I’ve seen in my short time as an AGM pest.

Chairman Stan didn’t get many opportunities to correct questioners for getting things wrong (a couple of those corrections were aimed at yours truly) and there were some pointed questions that would have had your average chairman squirming.

Of course, not stonewall Stan, who played every gripe with a straight bat.

I wasn’t the only one displeased with Stan’s performance, as he “only” picked up about 89% of the votes in his re-election ballot. By normal standards, where most incumbents get about 98% or 99% of the vote, that’s a fair slap in the face.

Naturally, there was the obligatory Jack Tilburn rant – timed at 12 minutes by the chairman – but quite incredibly, after bagging the heck out of Stan Wallis, Crazy Jack supported his re-election as a director!

Jack confided after the meeting that he’d been sitting next to Stan’s wife, so he had to be a bit diplomatic.

What’s happened, Jack? You’ve changed, man! You used to be about the music – now you’ve just sold out.

AMP’s bottom line performance was a net profit after tax of $690 million, down from last year’s $1.1 billion.

But of more concern was that they racked up a net loss after tax on ordinary activities of $190 million. They only got into the black thanks to their share of profits on outside equity interests – in particular a $940 million gain on their “unattributed life funds”.

Stan introduced a new innovation (as opposed to an old one) in getting each of the chairs of the board’s various committees (remuneration, audit etc) to get up and tell the meeting what their board has been up to. A couple of minutes of puffery from each is not a bad way of giving the mug punters a bit more of an idea of what the board does, but I didn’t think it achieved a great deal.

Still, kudos to AMP for a bit more transparency.

But with AMP’s share price wallowing, no matter what spin the chairman and CEO put on the company’s result for the year, one couldn’t help but leave the meeting thinking that we’ve been sold a pup.

Wallis and CEO Paul Batchelor were at pains to explain that the company’s poor result was due to the “depressed global investment markets” which we’d encountered in 2001.

While that might be something to hide behind (and they did, time and time again), plenty of shareholders seemed to be convinced that the company was doing worse than the rest of the market, and by a fair margin.

Wallis insisted that if you compared AMP to similar overseas companies, it ranks at the top of the heap.

That’s cold comfort to long-suffering AMP shareholders, who have gone through years of their stock’s price languishing, most recently around the $16 mark.

Oh, how we pine for the days when the NAB was going to pay $21 for AMP shares.

Come question time, I tried to put the AMP’s performance in equity investments into a bit of context, noting first how the All Ordinaries had gone up 6.5% in 2001, the New Zealand stock exchange was up slightly for the year, the Dow was down only 7.1%, and the FT100 was down 16.5%.

My big concern was that there was an item buried in the detailed Statement of Financial Performance, “Net Realised and Unrealised Losses” on investments of $8.7 billion and the company’s “Equity Securities” at year end was around $71 billion, so the net loss as a percentage of its equity investments was around 15%.

That’s pretty crude, I’ll admit, and Stan rightly questioned the methodology, but it’s probably the best stab one could make at some sort of performance measurement of the AMP’s equity investments based on the limited information shareholders get in the annual report.

My point was, shareholders can accept a bad performance in a difficult year, but it seemed the AMP only performed marginally better than the worst performed of the stock exchanges in which it would invest.

Chairman Stan insisted that it was wrong to look at the “Equity Securities” number in the balance sheet, rather, one should look at the $300 billion that the AMP has in “Asset Under Management”, a line he trotted out a few times.

Where they come up with that figure is beyond me, because there is only $173 billion of assets recorded on the Statement of Financial Position, $71 billion being Equity Securities, $61 billion being “Debt Securities”, $18 billion “Property” and $23 billion in rats and mice.

Still, I’ll humbly admit that I am a simple man and willingly offer myself to sit down with the bean counters at AMP as they explain to me how the performance of their equity investments has been so good during the year.

As yet, I’m not convinced.

And nor is the market, it seems.

Stephen Matthews from the ASA was first to the floor in question time and opened up with a typically eloquent and pointed spray, the theme being that he found the chairman’s and CEO’s explanations of the poor result “obtuse” and, without accusing them of fudging the figures, misleading.

He cited the example of the banking business, which the company claimed in the annual report had been profitable, but which was recently reported in the financial press as having made a loss of $47 million. Matthews claimed this “suggests a lack of objectivity and full disclosure”.

Chairman Stan disagreed with the tenor of these claims, but agreed that it was a complex business, so making full and transparent disclosure in the accounts was difficult. He paid lip service to Matthews’ suggestion of a focus group to improve the accounts before next year’s AGM, but one feels he’ll consign that one straight to the dust-bin of off-the-beam suggestions that AMP gets every day to improve the running of its business.

Can you imagine the mayhem if the AMP locked their top bean counters in a room with the ASA, Crazy Jack Tilburn, Crikey and a few old biddies to thrash out a more understandable annual report?

Save the money and invest it into some hot food after the AGM instead, I say.

Giles Edwards from the ASA made the point that AMP’s management talent is paid good money to reduce risk and it’s a weak defence to point to depressed global equity markets. We all know equity investment is a risky business but so too is insurance, he pointed out.

Wallis and Batchelor then, for mine, completely validated his point by waffling on about the inherent volatility in equity markets.

Not happy, Stan.

I got up again later and had the powder keg loaded with a few curlies. My first gripe was with the sale of the “general insurance business”. The company copped a write-down of $233 million for this, and sold it to Suncorp Metway in about May 2001. Suncorp has just made a profit announcement for the 6 months ended 31 December 2001, saying that this acquisition has made an $11 million contribution to profit, with more to come once it is settled into their operations.

I said it was a pretty poor effort that AMP would seemingly pay too much for this business, then sell it off to Suncorp who are doing with it what AMP couldn’t – turn a decent buck.

Chairman Stan countered that they basically broke even or may have made a marginal profit on the sale, so we should be happy about that, after looking at being about a billion dollars behind on the investment at one stage.

His precise words were that the sale was a “very satisfactory outcome”.

Again, this is an example of the company papering over what I and a lot of shareholders would think is a disastrous effort.

How is it that AMP could make a substantial investment in something that quickly goes down in value by a billion dollars, and then not long after they flog it off because it is a low margin business?

Doesn’t this show a complete lack of foresight in buying a business that they can’t make profitable?

Stan was upbeat about the remaining parts of the GIO business – time will tell if that confidence is well-placed.

I also asked a question about why the company made political donations of about $150,000, spread among the major parties. The explanation in the annual report was that it is to “support the democratic process”, an explanation I don’t find particularly compelling and which most of the other companies trot out in parrot fashion.

I asked why bother with this at all.

This got a fair cheer from the crowd, and a follow up from Jack Tilburn, so it must have been on the money!

Wallis explained that without corporate donations, the well would dry up because there are no individual political donations. He quite rightly noted that the company was even-handed and transparent in handing out the booty, and they do so without expecting anything in return. (Are you listening, Frank?)

$150 grand is loose change for AMP, but they just shouldn’t bother. Donate it to something worthy like a hospital, an artistic endeavour, some schools or universities – don’t give it to those grubs in Canberra!

Or give it to Crikey and we’ll facilitate the political process like no-one can!

And besides, there is the compulsory levy that determines electoral funding for all of the parties, so the punters are already being hit.

About forty minutes into question time, finally we were graced by Mr Tilburn, who delivered a 12-minute tirade which took chairman Stan about 5 minutes to respond to.

It was classic Tilburn – heavy on invective and vaudeville, light on facts and rational argument. I reckon he’s a must-see at AGMs and I wouldn’t want him to change for quids, but he annoys plenty of others. For all his huffing and puffing, his strike rate of good questions to bad would be about 1 in 10 (and plenty would say I’m being generous there).

I won’t go through the whole rant, but here are the edited highlights:

– Jack’s first pronouncement was that “it’s time to wake up – this is an annus horribilus”.

– He referred to Giles Edwards’ earlier question and said “God bless you, Giles”. No doubt Giles will be chuffed to be held in such esteem by such an esteemed character.

– When firing up on one issue, Jack lost his way in the accounts and bemoaned “the page numbers are too bloody small – you can’t see them!”

– Jack criticised Wallis for referring to their “$300 million of assets under management when it’s actually $292 million”. Actually Jack, it’s $292 BILLION.

– Jack suggested that Stan should be called “Dr Spin Doctor Wallis”. Can’t say I disagree with that double tautology.

– He applauded the company’s cost cutting and advised the meeting of his advice to Don Argus at the NAB – “reduce, reduce, I said Argus, or you’ll have your head cut off”.

– Jack’s not afraid of meeting out the punishment at AMP either, at one point suggesting to Wallis “I’d use my 11 size boot up your rear end”.

For anyone thinking AGMs were dull affairs, old Jack certainly provides a bit of colour.

The points he covered were nothing new, so there’s not much value in rehashing them here. It’s much more fun to focus on the vaudevillian aspects of his performance.

Two of the better questions came from a Mrs Cowan (I think) who said she was an unhappy shareholder but also a bit confused, because a short while back the company had offered shareholders the opportunity to buy more shares at a discount, now they were announcing a buy back. Her second dig was similar to Edwards’ earlier comments – AMP is employing a lot of so-called experts but they’re not doing a particularly good job. She suggested we’d be better off putting our money in the bank.

Stan once again relied on the “exposure to capital markets” defence and implored – not for the first time during the meeting – that “you’ll have to understand what we’re doing”.

It’s all very well to understand what a tough world AMP operates in, Stan, but all we simpleton shareholders understand is that our share price is going nowhere, and your so-called expert management team is being paid a handy little retainer but we get nothing for it.

Ted Rofe from the ASA was one of the last to get up and pertinently pointed out that rather than engage in a share buy-back, which would prop up the share price and help out all those executives whose options were under water, perhaps the company might consider a tax-free return of capital.

That would benefit all shareholders equally, whereas the buy back would have a disproportionate benefit to the executives with some 46 million options waiting to be exercised.

Batchelor and Wallis ignored this and thought he was asking about doing the buy back off-market rather than on-market. Rofe stuck to his guns, but at the second bite of the cherry neither Wallis nor Batchelor addressed his concern adequately in my view.

Let’s see if anyone follows this one up when the buy back goes ahead.

Question time was over about two and a half hours into the meeting, by which time about half of the punters had cleared out.

We then turned to the re-election of Stan Wallis and Ian Renard.

Incredibly, as noted earlier, Jack Tilburn actually supported Wallis’ re-election. Jack revealed to the meeting that he’d been sitting next to one of his fans who had reminded him that, given that Stan is from Coles, he has a “use-by date” and that is three years – from now!

I trotted out Stan’s other failures – Pineapplehead and Coles – along with disappointment over the GIO deal as reasons for not supporting his re-elections.

The proxies certainly agreed with Jack, with 248 million in favour, 34 million against and 33 million open. Still, Stan’s 89% vote in favour (including open proxies) is as big a kick in the pants as you’re likely to see. On show of hands there was a small minority against his re-election, but perhaps only 5% at best.

By comparison, Ian Renard romped it home with about 96% of the vote. Some voters might just remember his involvement with the State Bank of Victoria.

Let’s hope Crazy Jack’s show of faith in chairman Stan is well placed.